Did President Obama’s Waiver Option Gut Welfare Reform?

Lately the Romney campaign and its supporters have argued that President Obama used his waiver authority under Soc. Sec. Act sec. 1115 to “gut” the work requirement of the Personal Responsibility and Work Opportunity Act (PRWORA) (P.L. 104-193), commonly known as “welfare reform.” Threefactcheckers rated the statement as false. In response, former Gov. John Sununu said the fact checkers “don’t know what they’re talking about” and that the administration had broken the law.

Sununu contended that the law specifically prohibited the waiver of the work requirement, but the waiver would allow states to pay people for doing nothing. What does the law require? And what would the waiver policy permit?

PRWORA eliminated the requirement that states provide cash assistance for to every parent who met the income requirements. Grants to the states for the Temporary Assistance to Needy Families (TANF) were capped. State plans must require parents or caretakers of children to engage in work when the state determined they were ready or when they had received assistance for a total of 24 months, whichever occurred first, and ensure that parents and caretakers receiving cash assistance engage in “work activities” as defined in SSA sec. 407. The states must document the participation of a minimum percentage of adults receiving assistance in work activities. Sec. 407(d) defines work activities to include:

on the job training;

job search or receipt of job readiness assistance;

community service;

up to 12 months of job skills training;

finishing high school or getting an equivalency certificate; or

providing child care for someone participating in community service.

States were already permitted to disregard a parent of a child less than one year old for purposes of their work participation rates. Searching for a job or participating in job readiness programs could be counted as work activity only for six weeks in most cases (12 weeks if the state’s unemployment rate was more than 50 percent above the national average). PRWORA provided that waivers would have no effect on the new work requirement.

The work requirement applies to parents on Medicaid as well. Under Soc. Sec. Act sec. 1931(b)(3), states have the option to terminate a parent’s Medicaid benefits when they terminate cash assistance for failure to meet the work requirement.

So, what requirements is HHS willing to waive? The only provisions subject to the waiver are contained in section 402 of the Social Security Act. The section requires state TANF plans to ensure that recipients participate in work activities as defined in section 407. The memorandum specifies that the agency will grant waivers only for the purpose of testing more effective means of meeting the work goals of TANF. More specifically, the demonstration programs must focus on improving employment outcomes and add to the store of knowledge about what makes work requirements successful.

Success is not limited to increasing entry into the work force. It also includes retention, advancement, and access to positions that would reduce reliance on government benefits. The agency’s examples primarily address how participation is measured. They include:

improving coordination with other government workforce investment programs;

testing the effect on employment outcomes of extending the period permitted for vocational education and job readiness training activities;

collaboration with employers and post-secondary education programs to create “multi-year career pathways” that combine work with learning;

extending the period that individuals in subsidized employment are counted toward in the participation rate after they stop receiving cash assistance; and

addressing the needs of individuals with disabilities.

The states’ proposals must include performance goals and interim evaluations to assure that the performance goals are met. If a state does not meet the performance goals, the agency would impose an improvement plan. Failure to improve sufficiently would result in early termination of the demonstration project.

If implemented as described, the demonstration projects could support participants for an extended period, allowing them time for education or training to qualify for better paying jobs with benefits. These workers and their families could then move off the welfare and Medicaid rolls.